Apple Inc. (AAPL) iPhone Verizon Data Lower Than Expected: Munster

Apple Inc. (AAPL) iPhone Verizon Data Lower Than Expected: Munster
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Apple Inc. (NASDAQ:AAPL) shares are down 1.75% to $395.63 at the time of this writing on a price target cut from BMO. However, there is some more prominent news from Verizon and iPhone sales. This morning, Verizon Communications Inc. (NYSE:VZ)announced that it activated 4 million Apple Inc. (NASDAQ:AAPL) iPhones in the March quarter, representing 56% smartphone share (compared to 63% in Dec-12 and 51% in Mar-12). Gene Munster states in a new report that the number as essentially in-line with his expectations for Verizon. However, Verizon Communications Inc. (NYSE:VZ) suggested a 50/50 breakdown in sales between the iPhone 5 and 4/4S, which is slightly weaker than he had expected. He believes that all-in, the Verizon data ‘leaves us comfortable that Apple Inc. (NASDAQ:AAPL) will report March quarter revenue at the lower end of the $41-43 billion guidance (we are at $41.4 billion).’ Hw continue to believe that back half product launches will be catalysts for the stock and reiterate his Overweight rating.

Apple Inc. (AAPL) iPhone Verizon Data Lower Than Expected: Munster

VZ Reports 4 Million Apple Inc. (NASDAQ:AAPL) iPhones Activated In March Quarter.

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Verizon Communications Inc. (NYSE:VZ)’s 4 million Apple Inc. (NASDAQ:AAPL) iPhones activated in the March quarter represents 56% smartphone share at the carrier, up from 51% in Mar-12. On a sequential basis, iPhone market share declined from 63% in Dec-12. He believes the q/q decline is to be expected given that Dec- 12 was the first full quarter of iPhone 5 sales and iPhone share is typically strongest in the full launch quarter. Bottom line, the Mar-13 Verizon results show stability in iPhone’s franchise in the US which is a positive, but he cautions the International wild card. Separately, given investors only have the Verizon numbers, it’s difficult to predict total iPhones sold in the Mar-13 quarter. Overall Gene is looking for 35.5 million vs. The Street at 37 million and remain comfortable with his estimates.

IPhone 5/4S/4 Breakdown At VZ May Imply Slightly Weaker iPhone ASPs.

Beyond activations, Verizon Communications Inc. (NYSE:VZ) also stated that half of the Apple Inc. (NASDAQ:AAPL) iPhones activated were 4G (iPhone 5s), while the other half were 3G (iPhone 4/4S). He had expected a 60/40 split between iPhone 5 and the 4/4S, thus this early data point suggests iPhone ASPs may be a little weaker than expected. If the 50/50 breakdown were to remain true for the overall iPhone business, it could mean 4% downside to his $625 iPhone ASP, which would be a 2% headwind to revenue and EPS. This would be essentially margin neutral.

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